Guardian Media CEO explains why the paper doesn’t like paywalls

In a media world that seems to be rushing headlong towards paywalls and other subscription models, there are a couple of major holdouts, and one of the most prominent is The Guardian in Britain — where editor Alan Rusbridger continues to promote the idea of what he calls “open journalism,” a goal that relies on broad public access to the paper’s content. In a recent piece for The Economist, the chief executive of Guardian Media Group explained why he doesn’t see paywalls as a “one size fits all” solution to the media industry’s ongoing problems with declining advertising revenue.

(Note: We will be talking about paywalls and other alternative monetization methods for content at our paidContent Live media conference in New York on April 18, including an interview with Guardian editor-in-chief Alan Rusbridger about the paper’s strategy)

Andrew Miller, who took over as CEO of Guardian Media in 2010, is intimately familiar with the impact that falling ad revenue — particularly classified revenue — has had on newspaper publishers: before taking the top job at the paper’s parent company (which also owns The Observer), he was Guardian Media’s chief financial officer. In the most recent fiscal year, the company lost $70 million on revenues of about $300 million. And while it is owned by the non-profit Scott Trust, the newspaper is still under pressure to pare its losses and has been making cutbacks for the past year in an attempt to do that.

“Newspapers have always used a blend of different funding mechanisms to extract revenues for their ‘product’. That’s why I am unconvinced by those who say that the only model that works is to build paywalls. This is not an area where one size fits all.”

Paywalls work if you want to monetize rather than expand

As Miller describes it, paywalls work well in markets where a publisher has a large existing base of subscribers that it can monetize via subscriptions, and in particular when a newspaper or media entity serves a specific niche like business or finance:

“In some news organisations where growth in readership may not be so important and in particular where there is a strong existing print subscriber base to build on, a pure paywall may make excellent business sense. The Economist and perhaps the Times spring to mind here. On the other hand, if the news organisation is about growing reach and access, then a paywall is not – for the moment, at least – the answer.”

This is fundamentally the same argument that has been used by Don Graham, CEO of the Washington Post, and his publisher Katharine Weymouth to defend that paper’s dislike of paywalls. As Graham has described it, the subscription solution is less appealing for a newspaper whose readership comes primarily from outside its actual geographic market — something that is also the case with The Guardian (although there are reports that the Post may launch some kind of metered paywall this year.

Miller says that Guardian Media is continuing to explore paywalls or subscription models for some of its content (the paper charges for its mobile apps, for example). But it seems clear that for the British publisher, reaching new readers around the globe is still seen as more important at this point than monetizing its existing readership.

Disclosure: Guardian News and Media Ltd., the parent company of the Guardian newspaper, is an investor in the parent company of this blog, Giga Omni Media